The Big Impact of Small Business on Urban Job Creation

Small businesses are the backbone of urban economies, providing critical jobs for local residents. Our 2016 report offers compelling data on the jobs created by businesses with less than 250 employees five cities (Chicago, Dallas, Detroit, Los Angeles and Washington, D.C.). Our 2019 update does the same for 10 cities (Chicago, Dallas, Detroit, Houston, Los Angeles, Miami, New York City, San Francisco/ Oakland, Seattle, and Washington, D.C.).

Both reports make a strong case for city leaders to support the growth of small businesses with the same resources and intentionality as they do with the attraction and retention of large businesses. In the 2016 report, we outline a playbook with five strategies city leaders should implement to maximize small business job creation in their cities:

  1. Create a Comprehensive Small Business Plan Based on Economic Assets.
  2. Expand Contracting Opportunities for Small Businesses.
  3. Design Workforce Programs for Small Businesses.
  4. Coordinate Resources and Ease Burdensome Regulations.
  5. Upgrade the Inner City Business Environment.

The reports also find that small businesses are especially important to the inner city – economically distressed neighborhoods characterized by high poverty and high unemployment rates. Our research highlights the extent of the unemployment problem in each city’s inner city and shows that small business growth in inner cities is an important part of the solution.

Key findings of the updated report include:

–Although the distribution of businesses by size is similar across the 10 cities, the cities differed in terms of the share of jobs created by small businesses.

–In all 10 cities, small businesses create most of the jobs in the city overall as well as in distressed inner city neighborhoods, an outcome driven by small businesses with 5 to 249 employees.

–In seven of the 10 cities, the importance of small businesses as a source of jobs is greater in distressed inner city neighborhoods than in the city overall.

–A modest increase in the number of employees hired by existing small businesses (about one to three employees per business) could create enough employment opportunities for all currently unemployed inner city residents.

For a more detailed overview, read our Executive Summary blogpost.

To read the complete findings and recommendations, download the 2016 report and the 2019 update.

Press:

What Cities Should Be Doing for Small Business (November 4, 2016) Blog post in Governing

Where Small Businesses are Powering Inner City Neighborhoods (October 18, 2016) Blog post in Next City

Cities Need Small Business Growth Strategies Blog post in The Atlantic

 Incubating Progress, One Small Business at a Time Blog post in The Atlantic

 


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